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Congress Passes Comprehensive Tax Reform

For the first time in over 30 years, Congress has passed comprehensive tax reform. Yesterday, December 19, 2017 both the House and Senate debated and approved the conference report for H.R. 1, the Tax Cuts and Jobs Act. However, during consideration of the conference report in the Senate, a motion from Senator Bernie Sanders (I-VT) was upheld by the Parliamentarian, which found several provisions that violated the so-called "Byrd Rule." The provisions related to the expansion of Section 529 accounts and their application towards homeschooling, as well as the use of the phrase "tuition paying" were all struck from the Senate bill. The amended conference report was then sent to the House this morning where the modified bill was approved.

For the first time in over 30 years, Congress has passed comprehensive tax reform. Yesterday, December 19, 2017 both the House and Senate debated and approved the conference report for H.R. 1, the Tax Cuts and Jobs Act. However, during consideration of the conference report in the Senate, a motion from Senator Bernie Sanders (I-VT) was upheld by the Parliamentarian, which found several provisions that violated the so-called "Byrd Rule." The provisions related to the expansion of Section 529 accounts and their application towards homeschooling, as well as the use of the phrase "tuition paying" were all struck from the Senate bill. The amended conference report was then sent to the House this morning where the modified bill was approved.

H.R. 1 reforms the tax code by eliminating or limiting preferences in the code and lowering rates for individuals and businesses. In particular, TRALA was pleased that the final bill allowed for depreciation to be accounted for in determining a deductible interest component - albeit for only four years. In addition, TRALA members will be able to expense completely the cost of new vehicles and pass-through organizations will be able to compete more fairly with C-corporations.

Yesterday afternoon, the United States House of Representatives passed the conference report for H.R. 1 by a vote of 227 to 203. After passage in the House, the Senate debated and approved a modified version of the conference report by a vote of 51 to 48. Because the Senate modified their version, the House had to pass that modified version this morning, which it did by a vote of 224 to 201. H.R. 1 will now be sent to President Donald Trump for his signature which could occur by the end of this week. However, earlier today word began to circulate that the tax reform bill if signed in 2017 could automatically trigger cuts to Medicare, which would need to be avoided in a subsequent piece of legislation. Currently, Congress needs to pass a Continuing Resolution (CR), which funds the government beyond December 22, 2017. If Congress can include a legislative fix to the Medicare cuts in a CR, President Trump would likely sign the tax bill this week. However, if Congress is unable to agree on a fix for the Medicare cuts, it is expected that President Trump will wait until January to officially sign H.R. 1 into law.

Once the bill has been signed into law, the IRS will begin the process of implementing all of the changes to the tax code, which are set to go into effect on January 1, 2018. TRALA anticipates that Congress will need to work on a technical corrections bill in early 2018 to correct mistakes in the legislation. This could become problematic as it is unlikely Senate Democrats will support this effort so TRALA will continue to update its membership on the latest maneuvering by Congress in the coming months.